MINUTES SENATE FINANCE COMMITTEE May 10, 1999 9:10 AM TAPES SFC-99 # 131, Sides A and B CALL TO ORDER Co-Chair John Torgerson convened the meeting at approximately 9:10 A.M. PRESENT In addition to Co-chair Torgerson, Senators Sean Parnell, Randy Phillips, Gary Wilken, Lyda Green and Al Adams were present when the committee was convened. Senator Loren Leman arrived shortly thereafter. Senators Dave Donley and Pete Kelly arrived at approximately 10:00 A.M. Also Attending: BRUCE CAMPBELL, staff to Senator Randy Phillips; JACK KREINHEDER, Senior Policy Analyst, Office Management and Budget; MARY JACKSON, staff to Senator John Torgerson; LAMAR COTTEN, Deputy Commissioner, Department of Community and Regional Affairs; DICK EMMERMAN, Planner IV, Division of Energy, Department of Community and Regional Affairs; aides to committee members and other members of the Legislature. Attending via Teleconference: RANDY SIMMONS, Executive Director, Alaska Industrial Development and Export Authority, offnet Anchorage SUMMARY INFORMATION Co-chair Torgerson convened the committee at approximately 9:10 a.m. He advised the committee that they would first hear SB 169 and then come back to SB 157. SENATE BILL NO. 169 "An Act relating to missions and measures to be applied to certain expenditures by the executive branch of state government and the University of Alaska from the state operating budget for the fiscal year ending June 30, 2000; and providing for an effective date." Senator Parnell explained SB 169. He said there were several amendments to be submitted by himself and other members. Senator Parnell MOVED amendment #1. He offered a brief explanation. WITHOUT OBJECTION it was ADOPTED. Senator Parnell MOVED amendment #2 on behalf of Senator Leman. He offered a brief explanation. Senator Adams queried the intent. He said the language in amendment #2 would jeopardize the bill. (The arrival of Senator Leman was noted.) Senator Parnell asked Senator Leman to explain his intent to having this amendment included in the bill. The committee took a brief at ease. Co-chair Torgerson reconvened the committee. Senator Parnell WITHDREW amendment #2. WITHOUT OBJECTION it was WITHDRAWN. Senator Parnell MOVED amendment #3. He offered a brief explanation. He MOVED an amendment to amendment #3, page 1, line 18, to delete "achieving the mission of the mining sector". Senator Adams asked about how the amendment would read with this deletion regarding page 2, line 21. Senator Parnell explained this. Co-chair Torgerson said he felt something should be deleted. (There followed a brief discussion between Co-chair Torgerson and Senator Parnell.) BRUCE CAMPBELL, staff to Senator Phillips was invited to join the committee. He made a spelling correction page 1, line 18 and said "sector" should read "section". Senator Parnell moved to WITHDRAW amendment to amendment #3. WITHOUT OBJECTION it was WITHDRAWN. Senator PARNELL then moved amendment to amendment #3, page 1, line 18, delete "sector" and insert "section". WITHOUT OBJECTION the amendment to amendment #3 was ADOPTED. Further, WITHOUT OBJECTION amended amendment #3 was ADOPTED. Senator Parnell WITHDREW amendment #4. Senator Parnell MOVED amendment #5, page 10, line 7 of the bill. Delete "more than 180 days;" and insert ";". WITOUTH OBJECTION it was ADOPTED. Senator Parnell MOVED amendment #6, page 2, line 9. He explained all "DOA" reference from here and anywhere in the bill be conformed to read "ADMIN". WITHOUT OBJECTION it was ADOPTED. JACK KREINHEDER, Senior Policy Analyst, Office of Management and Budget was invited to join the committee. He said they supported the bill. He noted, however, some specific concerns by agencies. Mr. Kreinheder asked about amendment #4, which had been withdrawn. There was concern on page 27, regarding CSED. Senator Parnell said he chose not to move this amendment because it was included in SB 49. Senator Leman had brief comments. Senator Parnell responded. He said this would get as close as to how well CSED was serving the public. Mr. Kreinheder said they would be happy to work with Senators Parnell and Leman regarding this matter. Senator Parnell MOVED amendment #7, page 27, line 29 insert "and"; delete line 30 and renumber. Senator Leman noted that he got many complaints in his office to Court orders. Mr. Kreinheder said this should be referred to CSED. His impression was that the overall mechanism of error tracking is problematic within itself. Their preference would be at this time to delete this wording. Senator Leman said he would not object at this time, but that it was an area that needed to be worked on. WITHOUT OBJECTION amendment #7 was ADOPTED. Mr. KREINHEDER noted concern with page 28, lines 14, the average time between notices of violation of Title 4. The concern was with the workload. Senator Parnell also shared the same concern. It was his understanding this was a roll forward with language from SB 49. He would have no problem with the deletion of this material as it was not an effective measure as currently drafted. Senator Leman said he had no comment. Senator Parnell MOVED amendment #8, page 28, to delete line 14 and renumber accordingly. WITHOUT OBJECTION it was ADOPTED. In response to a question by Senator Adams, Mr. Kreinheder said he felt in most cases the performance measures do not set out specific targets but rather a measure. Therefore tracking a particular measure would be difficult. Senator PARNELL moved CSSB 169 (FIN). Senator Adams OBJECTED. By a roll call vote of 6 yeas (Torgerson, Parnell, Leman, Wilken, Green, Phillips) and 1 nay (Adams) (Donley, P.Kelly absent) it was REPORTED OUT with individual recommendations and accompanying fiscal notes for all state agencies in the amount of zero. The committee took a brief at ease. Co-chair Torgerson reconvened the committee at approximately 10:05 A.M. He called SB 157. SENATE BILL NO. 157 "An Act relating to power cost equalization; and providing for an effective date." MARY JACKSON, staff to Senator John Torgerson was invited to join the committee. She explained the new spreadsheets dated 10 May 1999. At the request of Co-chair Torgerson she explained the Governor's Commission recommendations of a deduction for commercial users. (The committee took a brief at ease on record while the spreadsheet was passed out to the members.) Ms. Jackson continued her explanation of the spreadsheet. (Pause on record.) She explained the letter as attached by Mr. Bruce Kovarik, Executive Director, Association of Alaska Housing Authorities to Senator Torgerson. It indicated the full board would be meeting tomorrow. Senator Adams said the letter was like a "bad headache". He said it had to be approved by the native boards and United States Housing and Urban Development. He felt there would be a "no" on this letter. Co-chair Torgerson said there was a present amendment that would authorize receipt of these monies if it should materialize. Ms. Jackson continued with the third attachment from Charlie Walls, President and Chief Executive Officer, Alaska Village Electric Cooperative, Inc. also dated 10 May 1999. It contained several suggestions about how to reach the PCE budget of $15 million. Mr. Leman comments to the committee. Ms. Jackson advised that Mr. Walls was on teleconference to respond to any questions. Senator Adams commented re PCE. He said his option was always looking at the bottom line. Ways need to be found to fund this program. The dividend program would have impact, especially to rural Alaskans. Most rural Alaskans use their permanent fund dividend to pay, for instance, their electric bills. (The arrival of Senator Donley was noted.) Senator Adams continued. He referred to the payment by Red Dog Mine to the State. He felt that proposals submitted on the spreadsheet should be considered. However, he would object to any of the amendments being offered today on this bill. LAMAR COTTEN, Deputy Commissioner, Department of Community and Regional Affairs was invited to join the committee. He made brief comments on the Four Dam Pool situation. (Tape #131, Side A, switched to Side B at log #585.) Mr. Cotten continued his explanation to the committee. He deferred to Dick Emmerman from the Division of Energy, Department of Community and Regional Affairs. DICK EMMERMAN, Planner IV, Division of Energy, Department of Community and Regional Affairs continued the explanation regarding the Four Dam Pool situation. The Four Dam Pool is now the responsibility of Alaska Industrial Development and Export Authority. He did not know its current status. Senator Adams asked if there was objection to the amendment supported this amendment. He also explained NPRA funds and what their impact might be. Co-chair Torgerson thanked the testifiers and said they would commence debate on the amendments. Senator Donley MOVED amendment #1. He offered a brief explanation. Senator Adams OBJECTED. By a roll call vote of 8 yeas (Torgerson, Parnell, Donley, Leman, Wilken, P. Kelly, Green, Phillips) - 1 nay (Adams) amendment #1 was ADOPTED. Senator Donley MOVED amendment #2. Senator Adams OBJECTED. Senator Donley offered a brief explanation. Senator Adams spoke to his objection. Senator Donley responded that this was not an elimination and for the first year would be over the original use. It would be reduced each year thereafter by about 25 kilowatt hours. Senator Adams said the average per homeowner usage varies according to temperature and area. Senator Kelly briefly commented to the amendment. Co-chair Torgerson said he concurred. He appreciated the efforts by Senator Donley but did not feel this was the best way to resolve the issue. Senator Leman said he would support a reduction at 500 kWh. He said he would oppose the amendment as is. The impacts are greater than what is being anticipated. By a roll call vote of 1 yea (Donley) and 8 nays (Torgerson, Parnell, Leman, Wilken, Adams, P. Kelly, Green, Phillips) amendment #2 FAILED. Senator Donley MOVED amendment #3. He offered a brief explanation. The committee took a brief at ease. Co-chair Torgerson reconvened the committee. WITHOUT OBJECTION amendment #3 was WITHDRAWN. Senator Donley advised he would not offer amendment #4. Senator Parnell MOVED amendment #5. Co-chair Torgerson offered a brief explanation. WITHOUT OBJECTION it was ADOPTED. Senator Adams MOVED amendment #6. Senator Parnell OBJECTED. Senator Adams offered a brief explanation. The committee took a brief at ease. Co-chair Torgerson reconvened the committee at approximately 10:45 a.m. RANDY SIMMONS, Executive Director, Alaska Industrial Development and Export Authority joined the committee offnet from Anchorage. Co-chair Torgerson asked an explanation from AIDEA regarding amendment #6. Mr. Simmons responded. Any amount taken out of the dividend would not be problematic for the authority. However, if it were to be appropriated that would cause difficulties. If the amendment was written to take a specific amount of the dividend it would not be a problem. Anything outside of the dividend language would be a problem. Mr. Simmons advised however, they did not have a copy of the amendment of the amendment up immediately. In response to a question by Senator Green Mr. Simmons replied that they pay all expenses from their income. A certain percentage of their dividend goes to the State. Senator Green asked if the amount could be predicted. Mr. Simmons said they did not predict the amount but they do forecast out a couple of years. They try to analyze how much was needed for loans and how much would be expended on projects. Co-chair Torgerson said this would take approximately $8 million out of their dividend calculation. Mr. Simmons said it would have a larger impact than this. In order to sell bonds the public wants to know there is stable security. Going outside this program would make the public nervous. AIDEA is also worried about what will happen to their overall program. Mr. Simmons referred to HJR 10, which asked AIDEA to negotiate regarding the sale of Four Dam Pool. They have not spoken with the community directly. He foresaw this probable sale as complicated and does not imagine it would be happening soon. He said the Legislature should not regard this is money in the bank for at least the next two years. Co-chair Torgerson requested Mr. Simmons to review the amendment and respond to his office in writing. The committee would look at the bill again this evening at 5:00 p.m. Senator Adams asked specifically Mr. Simmons look at lines 10 and 22, page 1 of amendment #6. Mr. Wilken also asked for a current status of a proposal for the purchase of the Four Dam Pool. Mr. Simmons said they have not yet received a formal proposal. ADJOURNMENT Co-chair Torgerson recessed the committee at approximately 10:55 a.m. until 5:00 p.m. today. SFC-99 -8- 05/10/99